Redundancy Agreement Section 16 The staff side of the NHS staff council executive have raised an issue with the NHS employers over the interpretation of the new redundancy agreement in section 16 of the AfC handbook. This has arisen from an apparent contradiction between paragraph 16.31 which provides Lord Warner's guarantee that staff will not receive a worse outcome than they would have received had they been made redundant on 30/6/06 which freezes the overall maximum entitlement at that date and paragraph 16.40 which reduces added years on a daily basis from 1/10/06.
The NHS employers have responded with the following advice which confirms that there is no worse outcome for staff in these circumstances:
Lord Warner’s guarantee is that people will get no worse a deal than they would have had had they been made redundant on 30 September 2006: freezing overall maximum entitlement (actual years of pensionable service earned plus enhancement) at that date. For anyone whose entitlement at 30 September was below the maximum enhancement then there is no difference. However for someone who was entitled to the maximum 10 years on 30 September, the enhancement will reduce on a day for day basis (matched however by a day for day increase in service). This would only have happened under the old arrangements if they were 55 or they already had 30 years service.
So someone who had 32 years service and was entitled to an eight year enhancement on 30 September 2006 would be entitled to 7.25 years enhancement on top of 32.75 years service on 30 June 2007. This is the same as the old arrangements. However the person with 20 years service and 10 years enhancement on 30 September for instance would under the old arrangements would have been entitled to 20.75 years service and 10 years enhancement on 30 June 2007. Under the new arrangements they get the same as they would have got on 30 September: 30 years pensionable service taken into account but made up of 20.75 years actual service and 9.25 years enhancement.
Paragraph 16.40 sets this out. There are worked examples which we have used to explain this. The relevant worked example is:
16.31 Transitional protection has two phases. The first phase applies from 1 December 2006 to 30 June 2007. During this phase, the maximum pension that an employee can receive on taking redundancy retirement is that to which they would have been entitled had they been made redundant under the old agreement on 30 September 2006.
16.40 From 1 December 2006 to 30 June 2007, the enhancement that the employee will be eligible to receive will be the enhancement on which the pension would have been based had they been made redundant on 30 September 2006, less the number of days since 30 September 2006. For those who have any part time membership, the reduction in enhancement will be scaled down according to the scaling factor applicable at 30 September 2006.
Employee aged 50 on 30 September 2006: Phase One Transition
Jane is aged 50 and has twenty years continuous and pensionable service on 30 September 2006. She is made redundant on 30 June 2007, nine months into transition and within the first phase and qualifies for early retirement on grounds of redundancy. Had she been made redundant on 30 September 2006, she would have been entitled to an enhancement of ten years service. Because, this was the maximum enhancement there would have been no entitlement to an additional redundancy payment. Nine months have elapsed between 30 September and the date of redundancy. Her enhancement is reduced by 9 months to nine years and three months. Added to her pensionable service of twenty years and nine months, she is entitled to an enhanced 30/80th pension with a 90/80th lump sum. She is not entitled to any additional redundancy payment. If she wished she could take the alternative of 20 months pay under the new arrangements.
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